Georgia: the comeback

Strike up a conversation with Vance Smith, Commissioner of the Georgia Department of Transportation, and sooner or later the word “personality” will crop up. As it did while he was reflecting on what matters in successful PPP delivery: “To me, Vance Smith, it’s personalities,” he told a roomful of delegates at Infrastructure Investor: Southeast.

That may seem a rather vague assertion to an audience of numbers-and-details-focused investors. But people interested in helping Georgia build out its infrastructure would do well not to skip over the issue of personality in Georgia’s growing PPP programme.

“You know, each state has its own personality,” Smith said. “What we’re trying to do is bring [PPPs] home and take bits and pieces that fit in with Georgia.”

In the past, that has not always been easy for Georgia. In 2003, the sunny southern state passed enabling legislation for PPPs that allowed only for unsolicited investment proposals, eventually amended to also include solicited proposals. But in the end the law resulted only in unsolicited proposals, including two precursors for what is today the ‘West by Northwest’ project, the state’s first PPP under a new 2009 law that cancelled its 2003 precursor – and with it all the work and effort that went into those unsolicited proposals.

Mistake

Smith, a 17-year veteran of the Georgia House of Representatives, openly acknowledged at the forum that the 2003 law – which he personally voted for – was a mistake. “It must have been because we changed the way we’re doing business,” he said during his speech.

But looking ahead, the smiling Georgian is nothing if not positive. If the Georgia Department of Transportation hits another “pothole”, he said, “we’ll fill it up with asphalt, we’ll move on”.

One source of Smith’s optimism is the team he’s assembled to go forward with PPPs, including the department’s new head of PPPs, Sandra Burgess. Burgess, a department veteran who replaced former head Earl Mahfuz when he retired in May, was formerly the general counsel to the department and has been close to Georgia’s PPP efforts from the start.

But the feedback he has received from the private sector also leads him to be optimistic. “It sounds like we’re headed in the right direction,” he said.

So perhaps it will be second time lucky for PPPs in Georgia. The first test is coming up soon: the state has already qualified three teams of bidders for the West by Northwest, a major corridor improvement in the metropolitan Atlanta area that will add about 40 miles of tolled lanes to several highways in the city’s west and northwest suburbs. The goal is to get a formal request for proposals for the project out this fall, Smith said.

“And it’s got to be right . . . I don’t want to put out anything wrong or that’s not complete,” he insists, highlighting another element of what makes Smith tick. He wants to get the first PPP right so that the state can build up credibility and momentum in the PPP market. In other words: he doesn’t want to repeat history. 

But if West by Northwest turns out to be a success – and, at an estimated cost of $2.3 billion, the project would be a blockbuster – it could turn Georgia into a PPP powerhouse. The state has already identified more than two dozen other prospective candidates for PPPs, including a “small PPP” for a long-term lease and management contract for 17 rest stops and 9 welcome centres along five of the state’s Federal highways. A request for information about the rest stops PPP went out in March and received seven responses, according to a Georgia Department of Transportation spokesperson.

The Carlyle Group, a Washington DC-based alternative investment firm, signed a contract last year with the Connecticut Department of Transportation to manage and improve 23 of the state’s highway rest stops. Would Smith be interested in a similar deal in Georgia?

“Yeah,” he said somewhat hesitantly, “but we want to create [it] for the Georgians.”

Or, to put it another way: he wants to fit the deal to Georgia’s personality.